Lessons from the European debt crisis - or why negotiating is different from haggling

written by Tobias Henz

From calling Greece "Europe’s Achilles Heel" to pop culture references with headlines like "Acropolis now", there seems to be not shortage of lurid language to describe what is currently happening with the Greek economy. Even worse - seasoned heads of states are not shy to insult each other personally, spoiling the climate past the numerous emergency summits currently held across the European Union.

However, after a reputable German newspaper recently published the latest document supposed to serve as a basis for a deal, it becomes inevitable to realise that the summits above all exemplify one thing: Classical positional bargaining, or put differently: haggling!

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Haggling produces unwise outcomes
Let us take a brief look at the events and talks preceding the Cuban missile crisis in 1962. John F. Kennedy and his Russian counterpart Nikita Khrushchev were trying to reach an agreement over how many inspections either nation would be allowed to carry out on the sovereign territory of the other nation to investigate suspicious seismic activity. While the Russian negotiators had a clear upper limit of 2 inspections annually  the representative of the United States would agree to no less than 10. Process was stalled, with almost fatal consequences as depicted in the newspaper clipping next to this paragraph. Oddly enough, before breaking up the negotiations, neither party cared to specify what an "inspection" would actually entail: How many people would be involved, how long they would be allowed to be on foreign turf, or what kind of equipment would be used. Had the negotiation gone in this direction, more wiggle room for agreement could have been found.
But making a position (such as "no more than 2" or "no less than 10") drive you in a negotiation makes you commit to it, defend it, and stick to it as long as possible to safe face. With that, it is almost impossible to search for and ultimately agree to solutions the reconcile the partners' original interests. Moving away from non-negotiable positions (2 vs. 10) towards discussing interests (what nature could inspections have) is an important step towards avoiding escalation and making an agreement possible.

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Haggling spoils relationships
Beyond the factual outcome of any negotiation, relationships between people always play a crucial role, both for finding a solution in a given situation and for making agreements in the future possible. However, when bargaining over positions, finding a solution becomes a contest of willpower: No party wants to give in to ensure they take as much as possible from the deal to be made, making the other party feel like they are dealing with a stubborn mule rather than with a reputable human being, not only spoiling the atmosphere for the current interaction but also generating a variety of bitter feelings, making future agreements all the harder to reach. A savvy negotiator should make sure to foster a favorable atmosphere between all parties involved in the negotiation - at minimum, it's easier to find out what truly moves the other party if you don't have to listen to them shout in rage.

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Haggling is inefficient
The process of reaching an agreement through positional bargaining is maybe best thought of graphically as you and your partner standing on opposite ends of a long line, defined by your initial positions or offers (so called anchors), and from there on gradually moving towards each other.
Yet, there are two problems with that: Firstly, to reach a deal that is favourable for you, it seems logical to anchor as far away from the other party as possible - and the same obviously is true for them as well, meaning the distance you need to move in order to meet and agree naturally becomes large - even before you started to negotiate! Secondly, to make the final deal better for yourself, moving only as little as possible in every step is imperative. But basic math tells us that there is an indefinite number of points on a line, so you could take minuscule steps towards your partner, who would surely return the favor - in equally minuscule steps. This maks haggling inherently inefficient.

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Haggling hinders creativity
Plus, who says that you will take steps towards your partner in a straight line? We don't need quantum mechanics to prove that a straight line between two events only tells us little about all the possible ways of connecting them. Common sense shows us that when finding solutions to potentially complex problems faced in a negotiation setting, just looking at the most obvious solution of agreeing to an intermediate point between initial positions as the solution is far from considering all possible options. Yet, that is exactly what positional bargaining or haggling is about. Thus, haggling hinders creativity, making it very unlikely that we find the best solution - if we manage to agree on something at all. True negotiating takes some detours, and makes the space for possible agreement much larger.

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These short considerations are inspired by the introduction to “Getting to Yes” - one the classics in negotiation theory, and the cornerstone of the so-called “Harvard concept”, coined by Roger Fisher and William Ury. If haggling over positions is not the way to go, what should you do instead? The key lies in moving past parties’ positions, and uncover the underlying interests. To learn more, I encourage you to pick up the aforementioned book - or, for a quick start, read through this recent tidbit.

With an eye on the Harvard concept of how you should negotiate, let us hope that the Greek crisis will see a turn from haggling to negotiating. If the parties involved would manage to move away from positional bargaining and haggling and into finding a solution to these most pressing issues in a negotiation through looking at and understanding the interests involved, and to negotiating interests, not positions, our chances to avoid fatal consequences of the negotiations rise. Granted, the consequences may not be as immediately fatal as the ones that almost became reality in 1962, but most certainly they are not any less critical to the future of not only international policy making, but to the lives of the people inhabiting this continent.